Question 1

Who should invest in value-add real estate?

Accepted Answer

Value-add real estate is a category of investment that appeals to those who are less risk-averse, who are motivated by greater upside potential, and who understand that a little TLC can go a long way.

Question 2

What is value-add real estate?

Accepted Answer

Value-add properties have existing income, but require some improvements to provide attractive returns. In their current state, they may be a bit run-down, or poorly managed. But operators who acquire these properties see their potential. With a few upgrades, operators are able to attract higher-quality tenants, charge more rent, and increase their property’s net operating income (NOI).

Question 3

What does value-add real estate mean?

Accepted Answer

Value-add properties have existing income, but require some improvements to provide attractive returns. In their current state, they may be a bit run-down, or poorly managed. But operators who acquire these properties see their potential. With a few upgrades, operators are able to attract higher-quality tenants, charge more rent, and increase their property’s net operating income (NOI).

Question 4

Are value-add properties more risky?

Accepted Answer

Value-add properties can be found in the upper-mid portion of the real estate risk spectrum, providing moderate to high risk for moderate to high returns.

Question 5

Is value-add real estate risky?

Accepted Answer

Value-add properties can be found in the upper-mid portion of the real estate risk spectrum, providing moderate to high risk for moderate to high returns.

Question 6

Is core real estate risky?

Accepted Answer

At the low end of the risk spectrum, core properties are typically located in Tier I or Tier II markets with high demand. The assets are in good condition, and are leased to quality tenants. Investors often employ a “buy and hold” strategy.

Question 7

Is core-plus real estate risky?

Accepted Answer

Similar to core real estate, these properties are often in desirable markets, but involve slightly higher risk. For instance, the property could benefit from minor renovations, or it may not be fully leased.

Question 8

Is opportunistic real estate risky?

Accepted Answer

As the name implies, opportunistic properties provide the highest risk, along with the highest returns.

Question 9

What is an example of value-add improvements in real estate?

Accepted Answer

1. Interior Upgrades: In this case, the Sponsor’s goal was to add value by upgrading individual units within this property.  2. Common Area Improvements: At the time of investment, rents at this property were below market. The Sponsor identified an opportunity to renovate the property’s common spaces, upgrading amenities and deferred maintenance

Value-Add Real Estate, Defined

The Monthly Multiple: September 2023

Preferred Equity Real Estate Investing: What, Why, & How

How EquityMultiple Strives to Provide Investor Protections

Opportunities in Private CRE Credit

Connect With Us

Who We Are

Investments

Discover

Explore More